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On the monthly chart, you can also see that this line here was resistance for quite some
time. It was resistance right here, because it got up to that point, came down, and finally
broke through. You should be all over it here, at 11.5. Then it traded all the way up to
14,000, before backing off again.
Now, this resistance line here, all of a sudden, resistance becomes support. This point right
here became support for this January selloff that came out down here. This line on this bar, this monthly bar, came down
and almost hit this prior resistance level, which now became support.
Whether or not that holds, to carry the market up higher, we don't know. We don't really
try to predict price. We only take a look at price to see where it general it is, in
relationship to where it's been. That's about all that we can really do.
You can see that we've been in a pretty good, steady uptrending market since 2005. Right
around here, the middle of 2006, was a great buying opportunity, all the way down to the
end of 2007.
Where we'll go from here is anybody's guess. All we can do is do the best we can.
They're not going to give us 73 cents on this iron condor. We're going to go ahead and take
a look at a cancel/replace. We may have to go down to 72. A penny is not going to hurt
us too much.
Let's put that in. That's going to work. Within a few minutes, if we don't get anything on
that, we'll do another cancel/replace. We might have to go to 71. There are some times
when you want to be aggressive, and some times when you don't want to be aggressive. Right
now, the way the market looks, it could go either way, here.
Let's take a look at our daily again. On the Dow, we've been stuck between 12,750, here,
down to
about 11,750. Let's just draw a line there. We've been stuck into this range, and if we
can break out either way - we're right in the middle of this range right now. This is
the high end; this is the low end. If this blue uptrend channel line continues to hold,
we should be in good shape.
Who knows where we're going to go from now? I would also like to take a look at this one.
I'm fitting positions in. It looks like I've got filled on my 72 cents. I didn't have to
go too much lower than that, which is good.
We put it in at 12:28. Within two minutes, we got our position filled. We're in good
shape. Let's go back to our Analyze tab and delete our simulated positions. We want to
"Show all." That's where we currently are. We're a little short Vega, which is good.
We're short Delta. Our Theta is a nice $7.74 a day. I think we're in good shape, here.
We might see some more weakness, but we've got a nice range.
Let's set our slices to our breakeven. We're at 39.72, right around 140 and 123. We'll
take a look at our chart, for the SPY. We want to be at this 140 level at this breakeven,
because that's just above our resistance. Our low breakeven was 123, which is really
nice. We're way down below these lows down here.
We're in very good shape here. We will keep an eye on the position, and now we're starting
to build our portfolio a little bit. We have our IWM position, we have our SPY position,
and we're starting to build our portfolio for this month. We have 31 days. We would
like to get all of our positions in at least 30 days before the expiration. We're working
on that now. You don't have to put them all on in the same day.
I have been adding a position a day for the last couple of days, in this test account,
just to show you guys how I actually add positions. I think it will work out very well.
Remember, adjustments may be necessary. This is where it becomes absolutely critical for
you to understand how to trade. You don't put on these trades and just leave them alone,
and don't even look at them. You have to take a look at them. You don't have to hover over
them, and you don't have to watch the market every single minute of every single day, but
what you want to do, is you want to take a look at your positions.
Let's say we do a portfolio-weighted position, here. We have some other positions on. We
want to take a look at all of our positions, on a portfolio-weighted basis. We want to
make sure that we are in the sweet spot, which is right in the center of our picture graph,
here. This is our expiration for May, which is the front month of our trades, that are
short. We're collecting Theta in this front month of May. I'm not going to count April,
because we only have a couple of days left in it.
We want to stay in the center position. If we get to one side or the other of this picture,
we want to start to make adjustments. We don't want to wait until we get down into here,
or over here. As soon as they start approaching our breakeven points, we want to make some
adjustments, so that we remain profitable for the month.
That's where it becomes absolutely critical that you know what to do. When you watch the
CD on adjustments, you will know exactly what to do. You'll have no hesitation. That's why
we constantly say, "Trade with confidence," because nothing should surprise you.
When something happens in the markets, all you have to do is watch for your breakevens.
You want to take a look at your breakevens on a daily basis. You don't want to go too
long and have your prices be at the point where they're beyond your breakevens, and
beyond hope. You really have to take a look at this at least a few minutes every day.
That's all. You just look at it, leave it alone, and you're going to have a very profitable
month.
There are things that happen that are totally out of your control. If we get a day where
you have the potential of a once in a lifetime sell-off of 600, 700 points on the Dow, even
then, at $132.50, 600 points on the Dow, is going to bring you around to about $12,400.
That's around where your breakeven is.
You're not going to get hurt too badly. You're going to get hurt a little bit, but you're
not going to get hurt too bad. Plus, there are some adjustments that you can do when
it's down there. If it does fall that much, the VIX is going up, option prices are going
to be a lot higher, and you're going to be able to sell additional premium. There are
things that you can absolutely do.
That's it for today. Trade with confidence, guys.